CBN Expects Inflation to Ease in First Half of 2021

By Dipo Olowookere

The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has said he expects the inflation rate in Nigeria to begin to ease from next year.

The nation’s chief banker made this disclosure over the weekend in Lagos while delivering a speech at the 55th Annual Bankers Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN).

Mr Emefiele expressed confidence that the inflationary pressure will begin to moderate from the first half of 2021 because of the steps being taken by the fiscal and monetary authorities.

According to him, one of these moves includes the significant cultivation and production of key staple items in the dry season to make food items cheaper for consumers.

He admitted that the inflation has continued to rise because of food crisis in the country caused mainly by COVID-19, flood in the farm belt of the country and insecurity in the northern part of Nigeria, where most of the food crops are cultivated.

The CBN Governor also disclosed that the raising of the value-added tax (VAT) by the government this year from 5 per cent to 7.5 per cent contributed to the high inflation, including the increase in pump price and electricity tariff.

However, he was silent on the border closure for over a year by the federal government, which has caused the inflation figures to rise.

“Inflationary pressure persisted during the year due to several factors. In addition to the disruption to global and domestic supply chains as a result of COVID-19, inflation was exacerbated by the increase in the VAT rate, petroleum prices, electricity price adjustments, farmer-herder clashes, exchange rate adjustment, and flooding that occurred in many parts of our farm belt areas. Inflation in October 2020 stood at 14.2 per cent.

“We, however, expect inflation to begin to moderate by the first half of 2021 as efforts are being made to enable significant cultivation and production of key staple items in the dry season,” the CBN chief said at the event attended by several bank executives.